Entirely New Retail Landscape will Emerge as Brands Need to Adopt Digital Business Models
Post Recession Elapsed Months
Post Recession Elapsed Months
BETHESDA, Md., Aug. 10, 2020 (GLOBE NEWSWIRE) -- PreciseTarget, the first data science and machine learning company to profile the retail buying taste of 220 million U.S. adults, has just released research containing an extensive analysis of the soft goods retail industry and found that it is well-positioned to rebound from the effects of COVID-19. Rob McGovern, CEO of PreciseTarget, utilized historical commerce statistics from the Federal Reserve Bank to develop a comprehensive data-driven analysis of prior recessions, and he made a series of predictions for the next few quarters.
“Based on the data we analyzed from previous recessions, we believe that the soft goods retail market will experience a faster return to pre-COVID-19 sales figures than other sectors,” said Rob McGovern, CEO of PreciseTarget. “Given the fragility of many traditional bricks and mortar retailers before the pandemic hit, our expectation is that more brands will begin to adopt a stronger e-commerce presence. In fact, we feel that if brands don’t adopt a data-driven e-commerce strategy, many will struggle to survive.”
The PreciseTarget research compared the “great recession” sales statistics from July 2007 to January 2009 and found that the soft goods apparel sector experienced a -11.7% reduction in sales and it took 29 months for the sector to recover. Those statistics compare very favorably when compared side-by-side to other retail sectors include:
- Autos (-43.7 reduction in sales, 75-month recovery)
- Electronics & Appliances (-16.7% reduction in sales, 84-month recovery)
- Home Goods & Furniture (-23.3% reduction in sales, 101-month recovery)
- Home Improvement (-54% reduction in sales, 115-month recovery)
“Historically, the only two areas that compare favorably to soft goods are cosmetics, which are almost recession-proof, and restaurants,” continued McGovern.
The research also offered several key predictions for brands and retailers as they look to emerge from COVID-19:
- 2020 Will Set New Records for Discounting: The timing of COVID-19 created an epic glut of inventory that must be cleared. Factors such as store closures, diminished demand for professional attire due to sheltering at home, and consumer uncertainty compounded the issue. T.J. Maxx is also overstocked, so the final link in the distribution chain might not be there for apparel brands to fall back on.
- Expect a 30-50% Reduction in Store Fronts: The pandemic is accelerating the decline of traditional bricks and mortar retail, leading to an even higher mix of online sales. Many will find that they don’t have the cash flow to support a physical storefront.
- Wholesale Brands Will Pivot to Direct-to-Consumer: Pre-pandemic, most wholesalers earned only 5-9% of revenues from selling directly to consumers. In the new reality, PreciseTarget predicts that the survivors will be 30% direct within one year, and 40% within two years
- Data Skills Will Be the Critical Success Factor: When assessing the winners and losers, the winners will be the brands focused on building digital expertise, and staffed with as many data scientists as merchandisers.
Access a whitepaper on the research here.
PreciseTarget is the first data science and machine learning company to profile the Retail Buying Taste of every US consumer, enabling brands and retailers to better match their product assortments with customers. Based on unique data sets of more than 5 billion retailer-provided, SKU-level transactions, along with daily assortment updates from hundreds of major brands and retailers, PreciseTarget helps retailers identify high-quality acquisition audiences curated to their assortment while fundamentally protecting consumer privacy.
Founded in 2016 by Rob McGovern, the celebrated entrepreneur who founded CareerBuilder, PreciseTarget is committed to helping retailers use consumer taste to acquire new customers, enrich existing customer relationships, and re-activate former customers. Learn more at www.precisetarget.com.
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